Question

In this unit, we introduce five paths to business ownership. The second most common way is to purchase an existing business. In the US, it is really an environment of caveat emptor when it comes to purchasing a business.

My business for the project is a Tea Lounge. Find a business that is for sale in your industry and preferably, is similar to your business idea at BizBuySell.

I found: Grilled Cheese Restaurant For Sale in Downtown Cranford

Cranford, NJ (Union County)

Description: Great opportunity to own a small business with low overhead in downtown Cranford, NJ. This well know grilled cheese restaurant has been in multiple articles and was featured as 2019 best grilled cheese sandwich. We were #10 on a list of 50 Dishes You Need to Eat in 2020. Look us up and see for yourself. Rent and cam fees is currently $1490.00 per month. Lease has 1 more year left with option of a 5 year extension. I moved 2 years ago and my new home is too far for a daily commute unfortunately. I can’t dedicate the time this business deserves. We are currently operating 11-4 Mon-Sat and closed on Sundays. Later hours and a Sunday opening would definitely be beneficial. We have a small staff and our inventory is simple and manageable. Check out our reviews. We built a name for this business. Asking price $29,999.

Please write what kind of information does the website provide to you? Share the following with your classmates:

• Industry
• Location and site of the business
• Why is the business for sale? Who are the key employees?
• Customers and suppliers of the business
• Date business was established
• Asking price and what are included in this price
• Your opinion whether you think the asking price is reasonable. Why or why not?
• What additional information are needed to conduct a thorough due diligence, in particular, to determine the actual business value?

Answer 1

1. Industry- Food and Beverage Industry
2. Location and Site if the business- Downtown Cranford, NJ (Union County)
3. Why is the business for sale & key employees- Home of the owner too far away and hence not enough time being invested in business. Key employees are chef, waiters etc.
4. Customers and Suppliers of business- Mass market product with specifically youth are targeted. Key suppliers are bakeries, sauces manufacturing companies, grocery stores etc.
5. Date business was established - Not given
6. Asking price and what is included- Asking price is $29999, I year lease, goodwill, employees and a network of suppliers
7. Yes asking price is reasonable, if we consider an average price of product at $10 and 20 customers daily, we get a revenue of $6000 and average cost will be around 3000$ including rent, wages and raw materials. We get a profit of 3000$ per month and hence we can get the breakeven in only an year.
8. Additonal information needed to determine actual book value- Balance sheet of the company and income statement also industry analysis and industry growth rate will be beneficial.